IBC Threshold Should Rise to Rs 5-10 Crore, Pre-CIRP Mediation Needed: NCLT President

New Delhi, Oct 3 (KNN) National Company Law Tribunal (NCLT) President Anupinder Singh Grewal has called for raising the minimum threshold for initiating insolvency proceedings under the Insolvency and Bankruptcy Code (IBC) from the existing Rs 1 crore to Rs 5 crore or even Rs 10 crore, saying several smaller claims are driven more by recovery objectives than genuine insolvency resolution.

Speaking at an Insolvency and Bankruptcy Board of India (IBBI) event on Thursday, Grewal also called for introducing mediation at the pre-Corporate Insolvency Resolution Process (CIRP) stage to resolve disputes before they lead to formal insolvency proceedings, the Financial Express reported.

Mediation To Prevent Unnecessary Insolvency

Grewal said the NCLT had already started using mediation in appropriate cases and had resolved 25 cases before they entered the insolvency process.

He noted that pre-CIRP mediation could help resolve disputes without exposing financially distressed companies to the wider consequences of insolvency proceedings.

He also highlighted the need for greater attention to the real estate sector and homebuyers, noting demands for specialised NCLT benches to handle real estate matters.

NCLT Clears 184 Resolution Plans In Six Months

Highlighting the tribunal's progress in reducing pendency, Grewal said around 383 resolution plans were awaiting approval when he took charge in May.

The NCLT approved 78 resolution plans worth Rs 5,500 crore during April-June and another 106 plans worth more than Rs 10,000 crore during July-September, which he described as an all-time quarterly high. The pending resolution plans subsequently declined to around 335.

Calls For Action Against Errant Insolvency Professionals

Grewal also called for stronger action against insolvency professionals (IPs) found violating professional discipline or integrity, particularly those facilitating the backdoor entry of promoters.

He suggested referring such cases to the professionals' other regulatory bodies to ensure accountability across their other professional roles, rather than limiting the action to a ban on practising as insolvency professionals.

Meanwhile, Minister of State for Corporate Affairs Harsh Malhotra said the IBC had delivered significant results and stressed that its guiding principles should include resolution, revival, value maximisation, and preservation of viable businesses, capital, employment and supply chains.

(KNN Bureau)